Illegal tobacco exceeded 60 billion rubles damage

#industry news

The damage caused to the budget of the Russian Federation from illegal tobacco trafficking in the first nine months of 2022 amounted to 61.1 billion rubles, said Vladislav Zaslavsky, acting director of the Department of digital marking of goods and legalization of product turnover of the Ministry of Industry and Trade, referring to the data of the National Scientific Center of Competencies in the field of combating Illicit Trafficking in Industrial Products" (ANO NCCR).

"According to the estimates of the Accounts Chamber, for the period from 2016 to 2021, the federal budget has missed about 300 billion rubles," he said on Friday during a round table in Moscow.

According to him, the NCCR data also indicate that the share of illegal cigarette turnover in the Russian Federation in the second half of 2022 amounted to 12.1% in terms of smoker. "Unfortunately, in some regions this share reaches 30% and higher. According to the results of another NCCR study, which was conducted at the end of 2022, the share of illegal turnover of nicotine—containing products on the market is 79%, including 93% of illegal turnover of nicotine-containing liquid," Zaslavsky said.

At the same time, he said that after a significant decrease in the share of illegal trafficking in 2019-2021 from 15.6% to 12%, further dynamics stopped at values of about 12-13%. Positive developments, according to him, in previous years are associated with the introduction of a marking system in the tobacco market (started in 2019). "However, marking, which today is deservedly recognized as one of the most effective tools for whitewashing the market, is still not the only such tool," he said. "In order to further reduce illegal trafficking, comprehensive legislative and regulatory decisions on the regulation of the industry are needed, which should be based on a deep analysis of the causes of the processes that occur in the market."

As the analysis showed, the most serious negative impact on the market, including, first of all, on the competitiveness of its bona fide participants, was, in particular, "a decrease in the number of control measures carried out in the conditions of virtually complete absence of a risk-oriented approach to control work in this direction," Zaslavsky said. "So, in the first nine months of 2022, three times fewer unscheduled inspections were carried out in the retail tobacco markets compared to the same period last year. At the same time, in 60 subjects of the Russian Federation in the third quarter of 2022, unscheduled inspections regarding tobacco sales points were not carried out at all. But not a single control purchase was carried out in 79 subjects," he said.

A similar situation is developing in law enforcement practice. In the first nine months of 2022, 2.5 times fewer cases of administrative offenses were initiated than in 2021.

"Thus, under these conditions, unscrupulous market participants can and do use the restrictions imposed on inspections to sell illegal products," he stated, saying that this issue was raised at a meeting of the state commission on combating illegal trafficking in industrial products, which took place on December 14, 2022. "In accordance with the commission's decision, the Ministry of Economic Development is now working together with the Ministry of Agriculture and Rospotrebnadzor on how control measures in the tobacco market will be provided in 2023. We are waiting for proposals, we are waiting for a decision, the deadline is set there - the first quarter of 2023," Zaslavsky said.

Zaslavsky also said that an interdepartmental industry working group on reducing the illegal market of tobacco and nicotine-containing products has been established within the framework of the state commission on combating illicit trafficking in industrial products. Its work plans include, in particular, the issue of strengthening control over the cross-border movement of these products, the introduction of liability for transport companies, increased responsibility for marketplaces for facilitating remote trade, etc.

The first meeting of the working group is scheduled for February 21.

Another reason for the retention of illegal immigrants in the market, he called "the incompleteness of reforming the regulatory framework of the industry." "Multi-vector initiatives to regulate the industry have finally been consolidated by the Ministry of Finance into one bill. And, despite its 100% readiness, it is still bogged down in procedural issues of coordination between departments and has not yet been submitted to the State Duma," he said.

In addition, Zaslavsky said, despite the great work carried out by the Ministry of Finance, the harmonization of excise rates in the EAEU countries has not been suspended. "The continuing difference in excise tax rates between the EAEU countries and the uncontrolled movement of goods between partner states entails the physical availability of cheap illegal cigarettes on the territory of the Russian Federation," he said. — The minimum price for one pack of cigarettes in the Russian Federation is 117 rubles, in Kazakhstan — 106, in Belarus — 50, in Kyrgyzstan — 85. It is clear that with such a "run-up" of prices and open borders, it will not be possible to reduce the level of illegal trafficking with existing tools."

Speaking about the initiative to transfer part of the income from excise taxes on tobacco products to the budgets of the subjects of the Russian Federation, Zaslavsky said that "the Ministry of Industry and Trade fully supports it." It is assumed that enrollment will be carried out according to a differentiated standard, depending on the volume of retail sales. At the same time, he believes that in order for this mechanism to fully work, it is necessary to provide subjects with appropriate powers in the implementation of control and supervisory activities.

According to Rosstat, Russian tobacco enterprises produced 222 billion cigarettes in 2022, which is 7% less than a year earlier.